A consultant knows it will cost her 15,000 to fulfil contract x. The contract is open to bid & she believes this can be modelled uniformly:
fx (x) = 1/20 for 10 < x > 30 (0 otherwise) (10 to 30 representing 10,000 to 30,000)
What bid should the consultant make to maximise her expected profit.
The answer is 22,500 but I'm totally confused here. If it will cost her 15,000 to fulfil contract x, why in god's name would she bid 22,500? Or do they mean she offers them the fact they can pay her 22,500 to do the contract and she reckons it'll cost her 15,000 to complete it?
Ahhh it does indeed mean that. Such poor wording.
fx (x) = 1/20 for 10 < x > 30 (0 otherwise) (10 to 30 representing 10,000 to 30,000)
What bid should the consultant make to maximise her expected profit.
The answer is 22,500 but I'm totally confused here. If it will cost her 15,000 to fulfil contract x, why in god's name would she bid 22,500? Or do they mean she offers them the fact they can pay her 22,500 to do the contract and she reckons it'll cost her 15,000 to complete it?
Ahhh it does indeed mean that. Such poor wording.